Salience of Inherited Wealth and the Support for Inheritance Taxation - Spencer Bastani

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Salience of Inherited Wealth and
             the Support for Inheritance Taxation∗

                    Spencer Bastani†                 Daniel Waldenström‡

                                          April 5, 2019

                                               Abstract

          We study how attitudes to inheritance taxation are influenced by information
      about the role of inherited wealth in society. Using a randomized experiment in
      a register-linked Swedish survey, we find that informing individuals about the
      large aggregate importance of inherited wealth and its link to inequality of op-
      portunity significantly increases the support for inheritance taxation. The effect
      is almost uniform across socio-economic groups and survives a battery of robust-
      ness tests. Changes in the perceived economic importance of inherited wealth and
      altered views on whether luck matters most for economic success appear to be the
      main driving factors behind the treatment effect. Our findings suggest that the
      low salience of inherited wealth could be one explanation behind the relatively
      marginalized role of inheritance taxation in developed economies.

          Keywords: Capital taxation, Tax attitudes, Equality of opportunity, Random-
      ized experiment
          JEL classification: D31, H20, H31.

   ∗ We   have received valuable comments from Adrian Adermon, Mikael Elinder, Francisco Ferreira,
Per Engström, Olle Hammar, Paul Hufe, Clara Martínez-Toledano, Andreas Peichl, Thomas Piketty,
Dominik Sachs, Stefanie Stantcheva, Alain Trannoy and seminar participants at the Luxembourg Insti-
tute of Socio-Economic Research (LISER), Ludwig Maximilian University of Munich, University Paris
II, Paris Dauphine University, Paris School of Economics, Statistics Norway, WU Wien, the 2018 confer-
ence of the International Institute for Public Finance, the 2018 Swedish National Economics Meeting, the
ZEW/SBF 2018 conference on experimental economics, the 2019 Canazei Winter School on Inequality
and Social Choice Theory and the CESifo 2019 Area Conference on Public Sector Economics. Financial
support from the Swedish Research Council is gratefully acknowledged.
    † Department of Economics and Statistics, Linnaeus University. E-mail: spencer.bastani@lnu.se.
    ‡ Paris School of Economics and Research Institute for Industrial Economics (IFN). E-mail:

daniel.waldenstrom@psemail.eu
1     Introduction
The taxation of inheritance and gifts has declined in many countries over the recent
decades.1 This decline occurs at a time when the economic significance of inherited
wealth in society appears to have increased. Studies of France and Sweden show
that aggregate bequest and gift flows have doubled in size over the last twenty years
(Piketty 2011, Ohlsson, Roine and Waldenström 2019) and microdata evidence shows
that heirs with the highest income and wealth receive the largest bequests.2 Further-
more, a recent strand in the optimal taxation literature highlights that inheritance tax-
ation can be a useful component of the tax system, especially if the government cares
about equality of opportunity (Farhi and Werning 2013, Piketty and Saez 2013).3
    The simultaneous decrease in the reliance on inheritance taxation and increase in
the economic importance of inherited wealth may seem puzzling from a scholarly
point of view. One potential explanation could be related to people’s awareness of the
recent trends in the role of inherited wealth in household portfolios. If people do not
perceive that the societal importance of inheritance has changed, they are less likely
to alter their political stance on its taxation. Policymakers take the public opinion
into account when they balance the social and economic desirability of taxes against
their political feasibility, and this balance appears to be particularly difficult to achieve
in the case of many capital taxes (Mankiw, Weinzierl and Yagan 2009, Scheuer and
Wolitzky 2016, Scheve and Stasavage 2016). Therefore, to understand the evolution
of inheritance taxation in developed economies, it is necessary to study the factors
determining the social acceptance of the inheritance tax. In particular, it may require
an inquiry into what people know about inherited wealth in the economy and how
such knowledge translates into political views of taxation.
    This study analyzes attitudes towards inheritance taxation and how they depend
on perceptions of the economic importance of inherited wealth in society. The anal-
ysis is based on new data from a recent household survey in Sweden that targeted
a large, nationally representative, sample of register-linked respondents. A key part
of the survey was a randomized information experiment in which randomly selected
    1 According  to Tax Foundation (2015), thirteen countries (of which eight are European) have re-
pealed their inheritance or estate taxes since 2000. Finland and Denmark have recently witnessed par-
liamentary initiatives to abolish their inheritance taxes.
    2 Boserup, Kopczuk and Kreiner (2016) and Elinder, Erixson and Waldenström (2018) document,

for Denmark and Sweden, respectively, a positive correlation between bequests and heirs’ income and
wealth. They also find that bequests are more important in relative terms lower down in the income
and wealth distributions. Nikoeï and Seim (2018) find similar evidence for Sweden but also highlight
that poor and wealthy heirs have different consumption patterns which can imply different effects of
inheritance on inequality in the short and long run. Adermon, Lindahl and Waldenström (2018) find
that bequests account for a large, perhaps half, of intergenerational wealth correlations in postwar Swe-
den, and Boserup, Kreiner and Kopczuk (2018) find strong links between bequests and early childhood
wealth status.
    3 See Bastani and Waldenström (2018) for a recent synthesis of the research literature.

                                                   1
individuals were exposed to different research-based facts about inherited wealth.4
One of these facts was that approximately half of all household wealth in Sweden
has been inherited. Furthermore, we informed about the fact that heirs with higher
income receive larger bequests and that half of Sweden’s billionaires have inherited
their fortunes.
    The estimated treatment effect shows that the popular support for an inheritance
tax increases significantly in response to our information treatment; the support is 30
percent higher in the treatment group than in the control group. Since the treatment
was randomly assigned, this effect has a causal interpretation. We find little evidence
of heterogeneous treatment effects across income, wealth, age, marital status, family
circumstances, educational attainment or political views, although several of these
variables are correlated with the likelihood of supporting inheritance taxation.5
    To understand how the treatment effect operates, we first propose a simple theoret-
ical model that highlights three key factors behind people’s support for an inheritance
tax: (i) their perceived share of total wealth in the economy that has been inherited, (ii)
their preferences for redistribution, and (iii) their expected personal tax burden. The
basic lesson is that support for inheritance taxation is likely to be low when people
who are open to the idea of inheritance taxation, and who prefer to live in a society
where the government intervenes to foster equality of opportunity, underestimate the
importance of inherited wealth. The model also captures the idea that concerns over
private economic circumstances can curtail desires to promote equality in society.
    We empirically evaluate the role of perceptions by using a question asked early in
the survey about the share of total household wealth that respondents think derives
from past inheritance. Comparing the distributions of perceived shares in the treat-
ment and control group, we find that untreated individuals systematically underesti-
mate the fraction of inherited wealth in household portfolios, and that the distribution
of perceived shares in the treatment group is substantially shifted to the right, in the
direction of the actual fraction. We then link this perception-shift to the increase in
support for inheritance taxation using three different exercises. First, we interpret the
treatment effect on perceptions as a ”first stage” and relate it to the baseline reduced-
form effect.6 Second, we exploit the variable capturing the perception-shift as a ”me-

   4 In an unpublished companion paper, we make an in-depth descriptive analysis of the survey.
   5 We  do not know how persistent our treatment effect is. Results from previous related studies sug-
gest that effects are stable at least for a few weeks after the initial experiment. For example, Kuziemko
et al. (2015) run a follow-up survey four weeks after their initial survey and find that the estimated
positive effect on the support for estate taxation seems to have persisted. Alesina et al. (2018) found
that their treatment effect of an increased support for income redistribution persisted in a follow-up
survey one week later. An important topic for future research is to analyze the persistence of the effects
from information experiments over longer time horizons.
    6 The individuals who change perceptions of the wealth distribution in response to our treatment

can be viewed as the ”compliers” of our experiment. Hence, another interpretation of this re-scaled
estimate is that it is an estimated treatment effect on the treated, even though the analogy is not perfect

                                                    2
diating variable”. Third, we condition the dependent variable on the outcome of the
first stage. All these exercises suggest that the treatment effect on tax support is almost
entirely driven by people who change their perception of the economic importance of
inherited wealth.
    The mechanisms underlying the treatment responses can be further examined by
using some other questions in the survey. Perhaps, most importantly, we show that
the treatment has a strong influence on whether or not people believe luck or unfair-
ness is the most important determinant of economic success. The effect is strikingly
similar in magnitude to the treatment effect on inheritance tax support, which is in
line with the equality of opportunity-justification for inheritance taxation. This sug-
gests that respondents associate high economic importance of inherited wealth with
inequality of opportunity.7 We also asked about people’s support for differentially
designed inheritance taxes. Our baseline inheritance tax question referred simply to
a ”tax on bequests” and it was preceded by a brief background about the Swedish
inheritance tax that existed until 2004. This tax had an exceptionally low exemption
threshold, approximately 7,000 EUR per heir, and most heirs were therefore exposed
to this tax.8 We then asked about a tax restricted to ”large” bequests, allowing us to
differentiate between low exemption inheritance taxes (like the Swedish one) and high
exemption inheritance taxes (like those in other countries). By doing this, we are able
to study to what extent self-interested motives play a role in determining individu-
als’ support for inheritance taxation.9 Our results show that the support for the high
exemption inheritance tax is considerably larger than for the baseline low exemption
inheritance tax. We also find that the treatment effect is smaller for the high exemption
inheritance tax. Both these findings are consistent with our theoretical framework.
    A number of sensitivity checks suggest that our results are robust across several di-
mensions. The treatment effect is consistent across different survey answer categories
(reflecting different degrees of intensity of support) and types of tax design (such as
proposing to make the inheritance tax revenue-neutral or exempting family firms from
since we lack a true first stage.
    7 Previous empirical work from different countries has shown that people attach considerable

weight to how incomes have been obtained when forming their views about income redistribution
(Alesina and La Ferrara 2005, Weinzierl 2017, 2018, Almås, Cappelen and Tungodden 2017) and wealth
redistribution (Fisman, Gladstone, Kuziemko and Naidu 2017). Lergetporer, Werner and Wößmann
(2018) use a survey experiment in a different context, showing that equality of opportunity-based argu-
ments are important for motivating the support for certain education policies.
    8 Exemption thresholds vary between 20,000 and 500,000 EUR in in other European countries and

the exemption threshold is over 5 million USD, see Appendix A.1.
    9 Kuziemko et al. (2015) study how attitudes to the US estate tax are affected by an experimental

treatment informing people that that only a tiny fraction of US households are wealthy enough to be
subject to the estate tax. They find that this drastically increases the support for the tax. Thus there
seems to be a strong tendency for people to support inheritance taxes that they no not expect to pay.
This also suggests that if one would to perform our experiment in the US context, taking the current US
implementation of the estate tax as given, it would be difficult to separate between self-interested forces
and other determinants of inheritance tax support as the former probably would overshadow the latter.

                                                    3
inheritance taxation). Moreover, we find that the effect of the inheritance tax treatment
on other capital taxes is negligible, reinforcing the link between providing information
about the importance of inherited wealth and an increased support for inheritance tax-
ation. Finally, we also test for potential experimental setting (Hawthorne) effects and
discuss psychological framing effects, and analyze the effects for individuals who re-
sponded to our survey with different time lags.
    Our paper connects to a large previous literature on the relationship between per-
ceived or actual levels of inequality and preferences for redistribution. Models by,
for example, Piketty (1995) and Bénabou and Ok (2001) analyze how preferences for
redistribution are shaped by individual experiences and perceptions of the income-
generating process, and a vast empirical literature addresses these questions in differ-
ent ways.10 A recent strand in the literature uses information experiments and survey
data to identify causal links between perceptions of inequality and the demand for tax-
ation, and are therefore more directly related to our study (see, for example, Cruces,
Perez-Truglia and Tetaz 2013 , Kuziemko, Norton, Saez and Stantcheva 2015, Ashok,
Kuziemko and Washington 2015, Karadja, Möllerström and Seim 2017, Weinzierl 2017,
2018, Fisman, Gladstone, Kuziemko and Naidu 2017, and Alesina, Stantcheva and
Teso 2018). The papers that are most closely related to our study are those that specif-
ically deal with issues relating to capital taxation. These are Kuziemko et al. (2015),
Alesina et al. (2018), and Fisman et al. (2017).
    Kuziemko et al. (2015) use survey responses among internet-based task-performers,
so-called Amazon Mechanical Turks, to assess the disconnect between rising inequal-
ity and lack of support for redistribution, in particular, in terms of the taxation of
estates of deceased individuals. While they mainly focus on income taxation, one of
their strongest results is that when informing people that only a tiny fraction (less
than a percent) of all decedents in the US are sufficiently wealthy to be subject to the
estate tax, this increases the support for the estate tax substantially. Whether this ef-
fect reflects a self-serving interest (people support taxes that they do not expect to
pay themselves) or equity concern (people infer from the treatment information that
the distribution of estates is highly skewed) is not clear. Alesina et al. (2018) ask about
attitudes to estate taxation in a cross-country survey context. Their experimental treat-
ment is to expose people to facts about income mobility and this does not appear to
influence people’s support for estate taxation. Fisman et al. (2017) use an experimen-
tal design where they confront a survey population of Amazon Mechanical Turks with
different hypothetical scenarios in which wealth and income have been generated in
different ways. One of their main findings is that respondents become more support-
ive of wealth taxation when wealth is perceived to have been inherited rather than
having been generated through lifecycle savings. They also highlight the importance
  10 See   Alesina, Giuliano, Bisin and Benhabib (2011) for an overview of the literature

                                                     4
of distinguishing between the optimality and political feasibility of tax policy.
    We complement these papers in several ways. First, we analyze the support for
inheritance taxation, and how it responds to information about inherited wealth in
the economy, rather than information about the structure of capital taxes or about
intergenerational income mobility. Second, we study a nationally representative sam-
ple where individuals are drawn from administrative population registers which is
especially valuable when one studies the factors behind the social acceptance of tax
policies. Third, we present a simple theoretical framework to help us understand how
shifts in people’s perceptions of inheritance can translate into changing political sup-
port for inheritance taxation.
    The remainder of the paper is organized as follows. Section 2 describes the dataset
and the experimental design. Section 3 presents the baseline results of how the treat-
ment influences the support for inheritance taxation. Section 4 presents a theoretical
framework for understanding how the treatment effect works via shifts in perceptions
of inherited wealth and Section 5 evaluates this relationship empirically. Section 6
presents extensions and sensitivity analyses, and Section 7 concludes.

2      Experimental design, data and institutional setting
This section presents our survey and register data, describes the information experi-
ment, as well as response patterns and randomization outcomes.

2.1     Survey of tax attitudes
We use data from a survey of tax attitudes that was designed by us and implemented
by Statistics Sweden. The survey was distributed by postal mail to 12,000 individ-
uals during May-June 2017. A sample population was randomly selected from the
adult population (a total of approximately 8 million individuals) within 54 predefined
strata constructed from four register variables: income (3 groups), housing wealth (3
groups), age (3 groups) and gender (2 groups). For each stratum, weights were created
to enable the computation of results representative for the total population.
    Responses were received from 5,776 persons, a response rate of 49 percent.11 This
is an unusually high response rate for a mail-based non-governmental survey, which
may partly be explained by the fact that we did not need to ask people about their
personal economic circumstances since these are observed in the registers.12 Analyz-

    11 Outof 12,000 sampled individuals, 212 were deceased or had emigrated. As part of a standard
procedure for surveys administered by Statistics Sweden, the survey contained a set of reminders (one
where the respondent received a postcard and another reminder containing a new copy of the survey).
In Appendix B.4 we analyze differences between respondents who handed in the survey early versus
those who handed it in later (after one or two reminders).
   12 Other similar research-based surveys in the Nordic countries have a response rate of around 30–35

                                                  5
ing the balance of responses using the register information, we find that survey par-
ticipation is positively associated with being married, middle-aged or elderly, born in
Sweden, highly educated and being a high-income earner.13 Therefore, we use calibra-
tion weights designed by Statistics Sweden from observed background characteristics
in order to account for these response patterns. In Section 6.6 and Appendix A.3, we
discuss the stratification and weighting in greater detail as well as present descriptive
statistics across samples showing that the populations are similar and that the calibra-
tion works as intended.14
    A central objective when designing the survey was to keep it short and simple. Pre-
vious research suggests that complicated questions or long surveys deteriorate both
response rates and the quality of answers.15 In total, the survey posed 16 questions on
a four-page questionnaire. The first two pages contained introductory questions about
occupational status and housing (which complement the register information), gen-
eral attitudes towards government spending on welfare services and military defense,
views on inequality of opportunity (whether ”luck and circumstance” or ”hard work”
matters most for economic success) and, finally, two questions about the aggregate
economic importance of inherited wealth and housing wealth. As will be discussed
later, one of these last questions will play a prominent role in the paper as it reflects
people’s perceptions of the importance of inherited wealth.
    Our main interest in this study are two questions about inheritance taxation. The
first question was phrased in the following way: ”A tax on inheritance should be
introduced”. The second question was ”A tax only on large inheritances should be
introduced”. In both questions, the response alternatives were ”Agree fully”, ”Agree
to a large extent”, ”Agree to some extent”, ”Do not agree”, and, ”No opinion”.
    The first inheritance tax question had a brief vignette informing respondents about
what an inheritance (and gift) tax is, and how it was designed in 2004 when it was re-
moved. Importantly, we inform about the (by international standards) low exemption
amount of 7,000 euros. Hence, respondents are induced to think about an inheritance
tax that not only affects very wealthy people, but also those who expect to inherit or
bequeath relatively modest amounts. In contrast, the purpose of the second question
was to induce individuals to think about an inheritance tax with a large exemption

percent (see the discussion in Karadja et al. 2017).
   13 A detailed examination of response patterns across survey questions shows no strong systematic

patterns across groups of respondents.
   14 To assess the representativeness of our sample population, we test for differences between the cal-

ibrated sample of respondents and the design-weighted sample of respondents and non-respondents.
The results show that the variables in the calibrated sample are close to population averages but the
variables pertaining to marriage, children at home and taxable income exhibit some discrepancies. As
a robustness check, we have in Section 6.6 carried out our main regression analysis under different
weighting schemes and verified that the main insights from our analysis remain intact.
   15 Experimental evidence shows that the cognitive burden of survey questions affects both response

time, dropout rates and the quality of answers (Lenzner, Kaczmirek and Lenzner 2009).

                                                   6
threshold, affecting only the wealthiest. Throughout the paper, we will use the nota-
tion τ LE to refer to the inheritance tax with a low exemption threshold and use τ HE to
refer to the inheritance tax with a high exemption threshold.
    The Swedish institutional setting actually provides an interesting laboratory to ap-
proach certain important questions. When we ask about an inheritance tax with a low
exemption amount, we provide an anchoring to the historical implementation of the
Swedish inheritance tax. This enables us to analyze how our information treatment
increases the willingness of individuals to support an inheritance tax that not only
promotes egalitarian objectives, but also entails personal economic sacrifices. Con-
ducting a similar experiment in a different context, where the institutional anchoring
is such that only a very small fraction of the population would expect to be burdened
by inheritance taxation, would make it more difficult to assess whether the effect of
our treatment is due to individuals receiving information about the economic impor-
tance of inherited wealth, or whether the effect is due to informing individuals that
they are unlikely to be burdened by the proposed inheritance tax.16

2.2    Register variables
A key advantage with our dataset is that the survey respondents (and their house-
hold members) are linked to administrative registers. This enables the selection of a
nationally representative, stratified sample and provides access to precisely measured
background characteristics. It also reduces the required length of the survey, as we do
not need to ask about variables that we can observe in the registers.
    The Swedish register databases are kept for population and tax-related purposes
and contain information about age, gender, marital status and household composition,
as well as tax-based records on income (wage, business income, pension income, inter-
est payments, dividends and capital income, realized capital gains and losses, mutual
fund returns), taxes paid and cash transfers received. Individual pretax taxable la-
bor income (including self-employment income) is our main income variable and in
our analysis we use dummy variables to separate between three income groups: the
bottom half of the distribution (P0-50), the next 40 income percentiles (P50-90) and
the top decile (P90-100).17 Household wealth is calculated using register information
on values of property (houses) and condominium (tentant-owned) apartments, and a
combination of observed and capitalized financial assets and liabilities (see Appendix
A.2 for details). We create four wealth fractiles in the same way as for income. Us-

   16 Kuziemko   et al. (2015) find that approximately 50 percent of the population supports the estate tax
when treated with information about the small fraction of the population that actually pays it. This is
similar to the 41 percent baseline support we find in Sweden for the ”large” inheritance tax.
   17 We try several alternative income definitions: individual vs household income, labor vs total in-

come, one-year vs three-year averaged income, pretax vs disposable income. The results are qualita-
tively the same across these definitions as shown in Appendix B.2.

                                                    7
ing a specification with relatively broad wealth categories mitigates the problem of
measurement error in the wealth variable.
    Educational information is reported in the education register, covering information
about the years of education and field of the educational degree. We also use informa-
tion about political party vote shares in the Swedish 2018 general elections for each of
the 6,004 election districts using data from the election authority and then link them
to each respondent at the election district level.

2.3    Experimental setup and treatments
We randomly divided the sampled population into three equally sized groups, each
containing 4,000 individuals. The first group received research-based information
about inherited wealth, the second group received information about housing wealth,
and the third group received no special information at all. In this paper, we focus on
the inheritance treatment.18 The purpose of the treatments was to convey informa-
tion about the aggregate importance and distribution of each wealth category. The
treatments came in the form of highlighted facts boxes on the front page of the cover
letter of the survey, but all other information in that letter was identical for all groups.
All three groups also received identical questionnaires.19 Our ambition was to make
the treatment information as neutral and descriptive as possible, avoiding information
that could be interpreted as biased or misleading.
    The inheritance treatment consisted of three research-based facts about inherited
wealth in Sweden, presented in bullet points: ”Inherited wealth represents about half
of all wealth in the population.”, ”Those with the highest incomes inherit the most.”
and ”A majority of Swedish billionaires have inherited their fortunes.” The first fact
refers to estimates of aggregate inherited wealth in Sweden by Ohlsson et al. (2019)
and Adermon et al. (2018). The second fact is based on population register data on
inheritances in Sweden, in which estates and bequests of all decedents and their heirs
are linked to income tax registers.20 The third fact relates to journalistic evidence on
the wealthiest billionaires in Sweden (published in the Swedish variant of the Forbes
400) reported in Bastani and Waldenström (2018).21
    The key message of the inheritance treatment is that inheritances are quantitatively
important, have an income gradient in the amount inherited, and that they matter par-
  18 We  analyze the housing treatment in a separate paper. However, we use it in one place in this
paper, namely in a robustness check analyzing the occurrence of ”Hawthorne effects” (see Section 6.5).
   19 On our websites, translated versions of all cover sheets and the questionnaire are available.
   20 The data come from the Swedish inheritance tax register analyzed by Elinder et al. (2018) (which

focused on the pre-inheritance wealth distribution of heirs.
   21 Additional support for these statements are found in studies of Denmark (Boserup et al. 2016,

Boserup et al. 2018), France (Piketty 2011), Sweden (Nikoeï and Seim 2018) and the US (Wolff 2015).
Furthermore, Di Tella, Drubra and Lagomarsino (2016) show how attitudes towards business elites
influence people’s attitudes towards progressive taxation.

                                                  8
ticularly for the wealthiest in society. Informing the general public about the economic
role of inherited wealth is complex and difficult, and we are aware of that this selection
of research facts captures central, though not all aspects of bequests and their distri-
butional impact.22 By providing a combined treatment with these three different facts,
we chose to convey that inherited wealth is important in society and associated with
inequality of opportunity.
    We perform balancing checks of the randomization outcome across the treatment
and control group in Table 1. The main message is that there are no indications of
any large systematic differences across the groups. Thus, we can rule out that the
experiment has generated systematic effects on dropout rates within or across groups.

                           Table 1: Balancing test of the experiment

                                Inheritance            Control             Inheritance−Control
                                 treatment             group            Difference       p-value
                                     (1)                 (2)                (3)            (4)
 Male                                0.51                0.52              -0.01               0.72
 Age                                48.91               49.83              -0.92               0.53
 Married                             0.41                0.47              -0.07               0.09
 Children                            0.36                0.43              -0.07               0.09
 Foreign-born                        0.17                0.22              -0.05               0.21
 Taxable income, ind.                278                 279                 -1                0.96
 Taxable income, hh.                 511                 541                -29                0.29
 House value, hh.                   1,443               1,689              -247                0.09
 Wealth, ind.                       1,224                999                225                0.35
 Wealth, hh.                        2,030               1,942                88                0.77
 Primary school                      0.19                0.20              -0.01               0.74
 Secondary school                    0.42                0.40               0.02               0.61
 University                          0.39                0.40              -0.01               0.81
 Employee                            0.50                0.48               0.02               0.62
 Self-empolyed                       0.06                0.08              -0.02               0.33
 House ownership                     0.38                0.41              -0.03               0.39
 Apartment ownership                 0.25                0.20               0.05               0.12
 Observations                       1,884               1,944
 Response rate (%)                   47.4                49.1
Note: All variables are stratification-weighted group averages. Units are [0,1] for all variables except
Age (years) and taxable income, house value and net wealth, which are measured in thousands of
euros (using exchange rate EUR/SEK = 10) for individuals (”ind.”) and households (”hh.”).

  22 For  example, some of the above-mentioned studies find that inheritances are relatively larger in
relation to the pre-inheritance wealth of low-wealth heirs and may therefore decrease certain wealth
inequality measures such as the Gini coefficient. These patterns are found in several contexts, but they
must still be regarded preliminary due to data limitations. For example, there may be problems with
under-reporting of intergenerational transfers due to tax avoidance and tax evasion (especially among
the wealthiest). There is also limited information about funded pension wealth or durable consumer
assets, which are relatively more important among less wealthy households. A different aspect is that
inheritance can be seen as an undeserved advantage and therefore contributes to inequality of oppor-
tunity, independently of the effect of inheritance on the inequality of economic outcomes.

                                                   9
3      Effects on the support for inheritance taxation
In this section, we present the main empirical estimation of treatment effects on the in-
dividual support for inheritance taxation. We first run reduced form regressions and
then examine effects for different response categories, and analyze potential hetero-
geneity in responses across socio-economic groups.

3.1     Baseline treatment effects
Our main specification is a reduced-form regression that tests the relationship between
individual i’s support for taxation, Supporti , an indicator of belonging to the treatment
group, Treatment, individual controls Xi and a random error term ui :

                           Supporti = α + γTreatment + β0 Xi + ui .                               (1)

Table 2 and Figure 1 present coefficient estimates of γ, the parameter of interest. In the
case of a low exemption tax, we find a positive and statistically significant effect of the
inheritance treatment. Average support in the control group is 24.5 percent and the
treatment effect is about eight percentage points, which suggests that the treatment
increases support by about 30 percent. Since the treatment was randomly assigned,
this effect has a causal interpretation. Including individual controls does not affect the
result, which reinforces the above finding of a successful randomization.
    It is worth noting that several background characteristics are significantly corre-
lated with supporting inheritance taxation. For example, university-educated respon-
dents are significantly more positive to the tax. This is in line with the model of educa-
tional gradients in the political support for left or right-wing parties in Piketty (2018).
High earnings and self-employment are negatively correlated with the support for in-
heritance taxation, even after controlling for personal wealth.23

    23 The
         result that high income but not high wealth individuals are more negative to inheritance tax-
ation may seem puzzling. However, the high wealth group is likely to be rather heterogeneous and
potentially consists of individuals who obtained their wealth in different ways (some through their
own hard work, and others by having wealthy parents).

                                                 10
Table 2: Treatment effect on the support for inheritance taxation

                               Low exemption tax, τ LE                 High exemption tax, τ HE
                            (1)                 (2)                   (3)                (4)
 Treatment                0.080**               0.078**              0.043                 0.052
                          (0.036)               (0.034)             (0.041)               (0.037)
 Married                                         0.052                                     0.029
                                                (0.037)                                   (0.039)
 Children                                        0.013                                     -0.046
                                                (0.045)                                   (0.048)
 Foreign-born                                    0.097                                     0.061
                                                (0.061)                                   (0.062)
 University                                     0.121*                                     0.088
                                                (0.062)                                   (0.065)
 Self-Employed                                 -0.115**                                 -0.165***
                                                (0.052)                                   (0.052)
 House owner                                    -0.032                                     0.056
                                                (0.047)                                   (0.049)
 Apartment owner                                 0.039                                   0.179***
                                                (0.060)                                   (0.060)
 Income P50-90                                  -0.050                                     -0.046
                                                (0.043)                                   (0.045)
 Income Top 10%                               -0.164***                                  -0.124**
                                                (0.052)                                   (0.058)
 Wealth P50-90                                   0.033                                     -0.072
                                                (0.043)                                   (0.044)
 Wealth Top 10%                                  0.003                                  -0.162***
                                                (0.053)                                   (0.055)
 Constant                 0.237***              0.159**            0.410***              0.319***
                           (0.023)              (0.076)             (0.027)               (0.087)
 Observations              3,687                3,568                3,674               3,561
 Controls                   No                   Yes                  No                  Yes
 Control mean              0.237                0.245                0.410               0.408
Note: The table shows regression coefficients where the dependent variable is support for low or high
exemption inheritance taxation. Estimates for sex and age dummies are suppressed. *, **, *** denotes
statistical significance at 10%-, 5%-, and 1%-levels.

    When asking about a high exemption inheritance tax (columns 3 and 4), this gen-
erates a much higher overall support: 40.8 percent against 24.5 percent support for
a broad tax on inheritance. This higher support signals that self-serving, or ”pock-
etbook”, motives could be at play; people tend to support taxes they do not have to
pay. This is consistent with the positive treatment effect on the support for the US es-
tate tax reported by Kuziemko et al. (2015). These authors informed people that only
a tiny fraction of the population (the richest elite) would pay the tax, and this made
people significantly more supportive of the tax. In our setting, when we inform people
about the economic importance of inherited wealth, we find only a small additional
effect on people’s tax support. The estimated treatment coefficient with controls is
5.2 percent, though statistically not different from zero. While this could indicate a
one-tenth increase in overall support, it is imprecisely estimated and smaller than the
treatment effect on the support for a broad inheritance tax.

                                                 11
Figure 1: Main treatment effects

      Note: Estimated coefficients of treatment effects from Table 2 with 95% confidence intervals.

    Notice that the estimates in Table 2 represent average treatment responses in the
treatment group, sometimes referred to as intention-to-treat (ITT) effects. These ef-
fects approximate the impact of information campaigns in ”real world”-settings where
information reaches individuals through broadly distributed channels, such as tele-
vision commercials. Some individuals can be reached through such communication
and can therefore be said to have ”received” the treatment. Others pay no attention,
do not understand or do not accept the information. Thus, some individuals are un-
treated even if they belong to the treatment group. The ITT effect captures the average
treatment effect across all potential recipients, both those who receive the treatment
and those who do not, and hence does not consider the fact that only a fraction of
the treated population complies with the treatment. In Section 5, we discuss average
treatment effects on the treated.

3.2    Heterogeneous effects
Some previous experimental studies examining preferences for redistribution have
found that individuals with different political ideologies respond differently to infor-
mation treatments (for example, Alesina et al. 2018). We now examine this possibility,
first graphically by plotting smoothed local regressions and then by running regres-
sions where we interact the treatment dummy with group characteristics.
    Figure 2 shows how the support for a low and high exemption inheritance tax

                                                   12
varies in the treatment and control groups over the distribution of taxable income,
net wealth, years of education and the political support for left-green parties in the
respondent’s election district. The graphs reveal several interesting patterns.
    First of all, the figures reveal how the support for inheritance taxation among un-
treated individuals depends on these background characteristics. We see, for example,
that tax support is clearly hump-shaped in both income and wealth for the high ex-
emption inheritance tax, that the support tends to be increasing in education for the
low exemption inheritance tax, but decreasing in education for the high exemption in-
heritance tax. Support is also, perhaps not so surprisingly, increasing in the vote-share
of left-green political parties.

                                                                          Figure 2: Heterogeneous effects
                                                             Income                                                                                                       Wealth

                                                                                                                                      50
                              50
Inheritance tax support (%)

                                                                                                        Inheritance tax support (%)
                                                                                                                                      40
                              40

                                                                                                                                      30
                              30

                                                                                                                                      20
                              20

                                                                                                                                      10
                              10

                                   0   10    20     30    40     50    60     70     80    90 100                                          0      10     20     30     40     50     60     70     80     90 100
                                             Taxable income distribution (percentiles)                                                                  Wealth distribution (individual, percentiles)
                                                           Education                                                                                   Vote share of left-green parties
                              50

                                                                                                                                      50
Inheritance tax support (%)

                                                                                                        Inheritance tax support (%)
                              40

                                                                                                                                      40
                              30

                                                                                                                                      30
                              20

                                                                                                                                      20
                              10

                                                                                                                                      10

                                   0   10    20     30    40     50    60     70     80    90 100                                          0      10     20     30     40     50     60     70     80     90 100
                                       Education distribution (years of schooling, percentiles)                                                Political support for left-green parties in districts (percentiles)

                                                                                                  HE                                                                                         HE
                                                      Treated: High exemption tax, τ                                                              Control: High exemption tax, τ
                                                                                    LE                                                                                          LE
                                                      Treated: Low exemption tax, τ                                                               Control: Low exemption tax, τ

Note: The lines are smoothed locally estimated linear regressions of support for inheritance taxation on
the variables listed in panel headings.

   Treatment effects are measured by the vertical distance between the solid and shaded
curves, and they seem to be largest in the tails of the income and wealth distributions,
among more educated individuals and among individuals residing in election districts
with intermediate degrees of support for left-green parties.24 The pattern that treat-

                              24 In
        appendix A1 we present further graphical analysis of treatment effects over the wealth distribu-
tion by partitioning the sample by respondent age. Younger individuals could face greater uncertainty
(or know less about) their own current or future wealth status, and thereby be less dominated by self-

                                                                                                       13
ment effects are smaller among the lowest educated and among people living in po-
litically right-wing-leaning neighborhoods is in line with previous findings of Karadja
et al. (2017) and Alesina et al. (2018). It should be mentioned that our results for the
tails are more uncertain since the statistical support is not very large there.
     Turning to regression analysis of heterogeneous effects, Table 3 presents estimated
interaction effects for the treatment and ten indicative background variables.25 The
general message is that we find no strong indications of heterogeneity in the treatment
effects. The main effects are often statistically significant with the expected signs, but
the interaction terms are statistically insignificant and, in many cases, close to zero.
The main exception is high-wealth individuals, who appear to decrease their support
for inheritance taxation in response to the treatment.

                            Table 3: Heterogeneous treatment effects

                                        Low exemption tax, τ LE              High exemption tax, τ HE
                                                (1)                                   (2)
 Treatment                                         0.045                                -0.058
                                                 (0.075)                               (0.081)
 University                                        0.048                                 0.025
                                                 (0.071)                               (0.075)
 Treat × University                                0.100                                 0.129
                                                 (0.078)                               (0.082)
 Top income decile                              -0.154***                              -0.129*
                                                 (0.058)                               (0.070)
 Treat × Top income decile                         0.006                                 0.046
                                                 (0.079)                               (0.092)
 Top wealth decile                                 0.080                                -0.025
                                                 (0.065)                               (0.067)
 Treat × Top wealth decile                       -0.147*                              -0.268***
                                                 (0.085)                               (0.085)
 Cut taxes/spending                               -0.068                                -0.075
                                                 (0.047)                               (0.052)
 Treat × Cut taxes/spending                        0.010                                 0.052
                                                 (0.074)                               (0.078)
 More defense spending                          -0.119***                             -0.243***
                                                 (0.044)                               (0.050)
 Treat × Defense                                   0.023                               0.184**
                                                 (0.084)                               (0.090)
 Left-green party support                        0.083*                                  0.036
                                                 (0.045)                               (0.049)
 Treat × Left-green support                       -0.019                                 0.013
                                                 (0.071)                               (0.076)
 Observations                                     3,417                                 3,407
 Controls                                          Yes                                   Yes
 Control mean                                     0.245                                 0.408
Note: Regression coefficients from equations where dependent variable is support for low or high ex-
emption inheritance taxation. *, **, *** denote statistical significance at the 10%-, 5%-, and 1%-level.

interested motives when expressing their views on inheritance taxation.
   25 These are multivariate regressions, showing interaction effects conditional other variables and in-

teractions. In appendix Tables A4 and A4, we show that bivariate variants get about the same results.

                                                   14
4     A simple model of support and perceptions
4.1     Baseline model
This section outlines a simple model framework to aid us in understanding how in-
forming individuals about the economic importance of inherited wealth may influence
the support for inheritance taxation. In very broad terms, there are two main channels
through which informing people about the importance of inherited wealth could in-
fluence their support for inheritance taxation. First, conveying that inheritances are
quantitatively important may suggest that there is substantial scope for inheritance
taxation to increase the level of redistribution in society and combat inequality in out-
comes.26 Second, the importance of inherited wealth in society is directly linked to
social mobility, which might influence the support for an inheritance tax since it is
usually perceived to be an effective instrument to combat inequality of opportunity.
    For the purpose of illustrating mechanisms, we proceed as follows. Suppose that
individuals differ in their perceptions of how important or skewly distributed inher-
ited wealth is in society, and that this perception is represented by the fraction of total
wealth that has been inherited, p ∈ [0, 1]. Our interpretation here is that a higher share
of inherited wealth implies a higher general degree of inequality in society. We also as-
sume that people differ in their preferences, captured by a vector of preference param-
eters θ. The individual support for inheritance taxation, denoted s( p, θ ), is assumed to
be determined by these two quantities: the perceived importance of inherited wealth
and policy preferences.
    The effect of our information treatment is to transform s into a post-treatment sup-
port for inheritance taxation ŝ = s(q, θ ) where q = q( p, a) is the transformed post-
treatment perception of the importance of inherited wealth. The post-treatment per-
ception q depends on the pre-treatment perception p and the factual statement con-
tained in our information treatment, denoted by a.27 We assume that the treatment
shifts p in the direction of the treatment fact, |q − a| < | p − a|.
    Denoting by f ( p, θ ) the joint probability distribution of p and θ, and by fˆ the joint
probability distribution of q and θ, the treatment effect, denoted by ∆, is given by:
                             Z                              Z
                       ∆=        s(q, θ ) fˆ(q, θ )dpdθ −       s( p, θ ) f ( p, θ )dpdθ.            (2)

The formulation s( p, θ ) for the support for inheritance taxation is stylized, yet it al-

    26 For example, simple tax reforms, such as implementing positive inheritance taxation together with

a redistribution of the tax proceeds in a uniform lump-sum manner would unambiguously make the
distribution of disposable income more egalitarian.
   27 We assume that the preference parameter θ is unaffected by our treatment, which can be motivated

by the fact that in our setting the treatment was designed to be neutral and conveying information rather
than political messages.

                                                    15
lows to capture an important feature of how the support for taxing a specific tax base
is determined, namely, jointly by preferences for redistribution and information. For
example, if groups of the population who have preferences for an egalitarian wealth
distribution underestimate the extent of wealth inequality, this will result in less sup-
port for redistributive policies as compared to a world with perfect information.
    To make additional progress, we postulate a simple decision-rule determining the
support for inheritance taxation where s takes the form

                                       s( p, θ ) = 1[ p > θ ],                                 (3)

where θ is assumed to have statistical support on [0, 1) and 1[·] is an indicator func-
tion taking the value of 1 if the expression in brackets is logically true (and otherwise
is equal to zero). This special case implies that an individual supports inheritance tax-
ation if the perceived importance of total wealth that is inherited exceeds the personal
preference threshold θ. If p, q and θ are independent and distributed according to the
marginal probability density functions f ( p), g(q) and h(θ ) (with corresponding CDFs
F, G, and H), respectively, we have that:
                                      Z 1Z 1                     Z 1Z 1
            ∆ = E fˆ[s] − E f [s] =            fˆ(q, θ )dqdθ −             f ( p, θ )dpdθ =
                                       0   θ                      0    θ
                                                           Z 1                                 (4)
                                                       =         [ F (θ ) − G (θ )] h(θ )dθ.
                                                            0

To interpret this expression, note that if all individuals underestimate the importance
of inherited wealth and the effect of the treatment is to make individuals believe that
the importance of inherited wealth is greater than their pre-treatment perceptions, we
have that G first order stochastically dominates F, namely, G (θ ) ≤ F (θ ), which implies
that ∆ > 0. From (4) we can also see that the treatment effect will be substantial if the
effect on perceptions F (θ ) − G (θ ) is large for preference thresholds θ shared by many
individuals (that is, h(θ ) is large). For example, the treatment effect will be substantial
if a large fraction of the population consider a just society to be one where inherited
wealth does not exceed θ = 1/3, but where for many individuals the pre-treatment
perception satisfies p < 1/3 whereas the post-treatment perception satisfies q > 1/3.

4.2   The role of ideological convictions and self-interested motives
The model above describes how shifting perceptions of inherited wealth can lead to
an increased support for inheritance taxation. It applies to individuals who would be
willing to support inheritance taxation, provided that the perceived economic impor-
tance of inherited wealth is sufficiently large.
   In reality, there are individuals who never support inheritance taxation and indi-

                                                 16
viduals who always support inheritance taxation independently of how they perceive
the importance of inherited wealth. For example, some people might appreciate in-
heritance taxation even if the economic importance of inherited wealth is very small
(for example, if they consider every dollar of inheritance as an undeserved advantage
that should be taxed). At the same time, there are people who think that inheritance
taxation is a violation of property rights, and that inheritance should not be taxed even
in situations where almost all the wealth in the economy has been inherited.
    Self-interested motives can also be important. Some people expect to inherit or
bequeath large fortunes whereas others expect to inherit or bequeath modest amounts,
or nothing at all. This is likely to create heterogeneity in inheritance tax support, since
attitudes to taxes also depend on how they affect people’s own economic situation.
Thus, a person might support inheritance taxation, not because he or she considers
this to be important from an equality perspective, but because the person does not
think that he or she will be burdened by it.28
    The presence of self-interested motives can be analyzed formally by extending the
model above envisioning that individuals, in addition to differing in terms of percep-
tions and preferences for equality, differ in terms of their wealth z. The wealth level z
could be interpreted as the wealth associated with two linked generations, reflecting
either the wealth that the parent generation is planning to bequeath to their children,
or the wealth that the child generation is expecting to inherit. In line with how actual
inheritance taxes differ across countries, and to obtain sharp results, we focus on in-
heritance taxes that differ in terms of an exemption threshold, denoted by m and assume
that the expected inheritance tax payment is zero if z < m.29
    Suppose, for the purpose of illustration, that individuals who do not expect to pay
the inheritance tax (z < m) always support inheritance taxation, and that individuals
who face a positive expected inheritance tax payment (z > m) may be in favor of
inheritance taxation. Building on the simple formulation of the support function in
equation (3), and letting ∨ denote the logical ”OR” sign, we let the support for an
inheritance tax be given by:

                                  s̃( p, θ, z, d) = 1[ p > θ ∨ z < m].                                 (5)

Assuming that individuals’ expected inheritances are unrelated to their perceptions
and preferences, and letting R(z) denote the CDF of the inherited wealth distribution

   28 In our empirical analysis, we find that there is a higher general support for an inheritance tax with
a large exemption (41 percent) compared to a tax with a low exemption (25 percent).
    29 Recall that in the empirical parts of the paper, we focus on two discrete values of m, correspond-

ing to the survey questions asking about taxes with a low exemption threshold τ LE and with a high
exemption threshold τ HE .

                                                    17
over some interval [0, z̄], the expected support in the total population can be written:

                  E f [s̃] = Pr{ p > θ } + Pr{z < m} − Pr{ p > θ ∩ z < m}                    (6)
                        = E f [s] · [1 − R(m)] + R(m).                                       (7)

We then see that

                                 dE f [s̃]
                                           = R0 (m)(1 − E f [s]),                            (8)
                                  dm

which is strictly positive whenever R0 (m) > 0 and E f [s] < 1 implying that a tax with
a greater exemption threshold always has a higher average support in the popula-
                     dE [s̃]
                        f
tion. Furthermore, dm      is decreasing in the number of people who would support an
inheritance tax in the absence of any personal wealth concerns E f [s], which is given
                                                                      R1R1
by the statistical relationship between p and θ (recall that E f [s] = 0 θ f ( p, θ )dpdθ).
What this means is that if the perceived inequality is high, equity motives dominate
self-interested motives, and the support for inheritance taxation is not very sensitive
to the level of the exemption threshold.

   Figure 3: Graphical illustration of the model of support for inheritance taxation

Note: The figure shows the mapping of inheritance tax support in our model from the respondents’
ideological position, wealth status and pre-treatment inheritance perceptions.

   Figure 3 shows an attempt to graphically illustrate the above discussion. The bot-
tom panel of the figure shows a group of individuals, we may call them ”Egalitarians”,

                                               18
who support inheritance taxation independently of how they perceive the economic
importance of inherited wealth. The top panel shows a group of people, we may call
them ”Libertarians”, who always oppose inheritance taxation. Our formal discussion
above pertains to the group of individuals in the middle panel, who we refer to as
”Center” individuals, whose attitudes to inheritance taxation are elastic and can be
affected by the treatment. For these ”centrist” individuals, the support for a high ex-
emption tax is higher than the support for a low exemption tax, following condition
(8). The large gap in support for low values of the inheritance share can be explained
by the fact that even when the perceived inheritance share is very small, there are in-
dividuals who support the inheritance tax for selfish reasons. For higher values of the
perceived inheritance share, the difference in support between the two taxes is smaller
(an increase in E f [s] lowers the derivative in equation 8). We will show the empirical
counterpart of Figure 3 in Figure 5 in the next section.
    The effect of an information treatment that increases the average perceived share of
inherited wealth can be thought of as a movement along the lines in figure 3. Formally,
the treatment effect on the support for an inheritance tax with an exemption threshold
of m, can be written as:
                                                                                      
  ∆m = E fˆ[s̃] − E f [s̃] = E fˆ[s] · [1 − R(m)] + R(m) − E f [s] · [1 − R(m)] + R(m)
                                                                                           (9)
      = ∆ · [1 − R(m)].

This result illustrates that the predicted treatment effect is a decreasing function of the
exemption threshold m of the inheritance tax. The greater is the number of individuals
who support an inheritance tax because they do not expect to pay it, the fewer are the
individuals who can be induced to support it through exposure to information about
the importance of inherited wealth. This feature of inheritance tax support is reflected
in the smaller slope of the upper line in Figure 3.
    Notice that if the exemption threshold is very high, such that R(m) ≈ 1, we get
∆m ≈ 0. In other words, the effect of information about distributional outcomes is
likely to be very small in economies where the vast majority of individuals under-
stand that they are very unlikely to pay the inheritance tax. This aspect is consistent
with Kuziemko et al. (2015) who document a dramatic increase in the support for es-
tate taxation when informing respondents that only a tiny fraction of US households
actually are exposed to it. If that study had in addition informed respondents about
the importance of inherited wealth in the economy, the effect of this additional in-
formation would likely have been small. In the Swedish context, in contrast, given
the anchoring of individuals to the broad-based Swedish inheritance tax, most people
would expect to potentially be exposed to the inheritance tax proposed in our baseline
inheritance tax question. This makes Sweden a good laboratory to study the effect of

                                             19
information about the importance of inherited wealth on the support for inheritance
taxation, as self-interested motives that make individuals mechanically support inher-
itance taxation are likely to be smaller than in other contexts.
    In Table 4, we summarize the findings in this section with a list of theoretical pre-
dictions about how the treatment will affect the support for the low and high exemp-
tion inheritance taxes depending on people’s pre-treatment support for inheritance
taxes, their wealth status and their ideology. For exposition purposes, we focus on
a binary representation of perceptions, using the terminology ”Flat” if the perceived
inheritance share is low, and ”Skewed” if the inheritance share is perceived to be high.
For simplicity, we focus on the ”compliers” of our experiment, namely those who up-
date their perception to ”Skewed” if their pre-treatment perception was ”Flat”. We di-
vide the population into three wealth groups where the ”Poor” group can be thought
of those who do not expect to inherit or bequeath anything, the ”Middle” group rep-
resents those who expect to be burdened by the low exemption inheritance tax but not
the high exemption inheritance tax, and finally, the ”Wealthy” group that is expected
to burdened by both types of inheritance taxes.
    The table shows how libertarians never support and egalitarians always support
inheritance taxes, regardless of their knowledge about the distribution of inherited
wealth. In the center group, the baseline (pre-treatment) support is higher for the
high exemption tax than for the low exemption tax. However, the reverse is true for
the treatment effect: it is higher for the low exemption tax and lower for the high
exemption tax. These patterns are broadly in line with our empirical findings.

                                           20
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